Quite possibly the biggest scam of the 20th Century. I mean, definitely a scam, but quite possibly the biggest.
Sadly, a scam of these proportions was made possible by the new technology of the World Wide Web.
StockGeneration, incorporated in the Commonwealth of Dominica, opened for "business" on 1 January 1998 as an online casino. However, it was unlike any casino you may have ever seen.
It was patterned after the stock market, based on the observation that the stock market is essentially a game of chance: You buy shares in a company for a certain price which will go up and down in time.
So, Stockgeneration created 11 virtual companies and invited players to buy "shares". With the use of presumably sophisticated software, the price of the virtual "shares" went up and down like in the real stock market.
So far so good, nothing wrong with that: You take your chances. You win if you're lucky, lose if you're not. Just like in a real casino.
The scam part was in "companies 9 - 11." Company 9 was supposedly guaranteed to only go up, about 5% a month (yes, a month, not a year). StockGeneration claimed to have set up a reserve for Company 9.
Furthermore, companies 10 and 11, while not guaranteed were growing at even higher rates (15% a week, double your money every month). The shares were virtual but the money was real. For 18 months, it worked like a charm. A lot of players made a lot of money. The game became very popular. With 20,000 active players none of whom ever lost a penny, StockGeneration kept attracting new players.
The game managed to fool even some people who study scams and warn others about them. Indeed, I put money in the game at the end of August 1999 after I learned that one of such scam watchers has invested in StockGeneration, and was very happy with it. And after I reviewed all web sites I could find that talked about the game.
Alas, the pyramid started to show subtle cracks in September of 1999, just a week after I sent my money in.
As I said, the cracks were very subtle at that time and they seemed fixable. But by December of 1999, I became convinced the game was not what it appeared to be. I expressed concerns on a mailing list dedicated to StockGeneration. Most people tried to reassure me my problems with the game were unique and would be fixed eventually.
In January 2000, I finally expressed concern that StockGeneration was indeed a scam. I informed Dateline NBC and requested assistance. Though NBC never even acknowledged my request, I started receiving lots of abuse from other players. I was called selfish (sic!) because I was "destroying the game" for others who were still "winning" (on paper only, by then).
Finally, in March 2000 every "player" lost everything as the value of their shares (including the "guaranteed" ones) dropped from tens of thousands dollars to pennies.
Suddenly, everyone realized they were had. Though to this day, not a single person who had abused me back in January has apologized.
Ironically, even after the complete collapse, StockGeneration continued (and probably still does) pretending they were the best game in town (i.e., the Internet). Check them out at www.stockgeneration.com if you feel like it. They ripped off people out of millions of dollars.
Ponzi schemes normally collapse within a few months. StockGeneration managed to give people profit for 18 months, and continued to appear legitimate for additional 9 months. This was made possible because it operated over the Internet. That way, it was able to attract many more investors than any other scheme ever before. And since the 20th Century is almost over (and, according to many, already ended months ago), it is safe to call StockGeneration the biggest scam of the 20th Century.
Caveat Internetor!